Everyone knows by now that the
state of Michigan, one of the strongholds of American labor, on
Wednesday passed a “right to work” law—meaning that non-union workers can work
in jobs that are protected by union efforts, but without having to join the
union that protects them. The new law was rushed through in a lame-duck session
of the legislature by a solid block of Republicans, many of whom lost their
seats in the recent election. The Repugs knew that if they didn’t pass the law
now, they’d probably never get it through the new legislature. They also knew
that their governor, Rick Snyder, elected two years ago as a ‘moderate,’ would
sign the bill despite his promises not to. Michigan thereby joined 23 other
states with ‘right to work’ laws—a movement that seriously threatens the very
existence of unions in the United States.
What
is the result of leaving workers without union help? A story in the Dec. 12,
2012 Bloomberg News (reprinted on Yahoo News) by Leslie Patton provides some
indication. The story, comparing the salaries of a McDonald’s line worker with a
McDonald’s CEO, focuses on the life of Chicago native Tyree Johnson. In his
40s, Johnson works at two McDonald’s in Chicago (he needs the two jobs to try
to make ends meet) as a fry cook for the princely sum of $8.25 an hour. McDonald’s
CEO until July, Jim Skinner, meantime, earned $8.75 million per year (580 times
what Johnson, a 20-year employee, makes). This means, as Patton points out,
that Tyree Johnson would need to work about a million hours—more than a century
of work—to equal the yearly pay of his boss, Skinner. This is consistent with
what we’ve been hearing for years now: that the pay of America’s CEOs and other
“winners” in the economic lottery has been skyrocketing (when Johnson started
at McDonald’s 20 years ago, the CEO ‘only’ made 230 times his pay), especially
compared to the earnings of middle and lower class Americans. And it’s
gotten worse since the economic collapse of 2008-09. Patton points out that the
‘recovery,’ such as it is, has been the most uneven in recent history: the top
1% saw their earnings increase by 5.5%, while
those in the bottom 80% saw their earnings fall by 1.7%. And that doesn’t even
count the top 0.1% who are really raking it in. But for the likes of the bottom
fifth like Tyree Johnson—whose ranks are increasing due to the downturn, with the
numbers
employed in fast-food restaurants and retail giants like Wal-Mart
expanding exponentially, all at minimum wages, while the net income of their employers
(McDonald’s, Yum [owners of Pizza Hut, Taco Bell, and Kentucky Fried Chicken]
and Wal-Mart) has increased by a whopping 22% since the downturn—life just
keeps getting harder. Just to pay his single-occupancy hotel rent of $320 a
month, Johnson needs both of his McDonald’s jobs. As to buying the $99 computer
he found online (Johnson actually trained for a year and a half at a computer
school), forget about it. This is one of the reasons he is attending meetings
of a Workers Organizing Committee of low-wage employees hoping to get a
$15/hour wage in Chicago—but it has to be done beneath the radar. McDonald’s
fires workers who even hint about unions or organizing. They actually have a
hit squad of skilled union busters whom they fly in to areas where union talk
gets started.
And
that is the key link between Johnson and Michigan’s new law. Without unions,
low-wage workers are in precisely the position factory workers were in at the
end of the 19th century (and workers in Bangladesh are in now). Any one worker
trying to fight the power of a corporation with money to burn and power to
match was helpless. Only if workers banded together and thus wielded the power
of numbers and the threat of a strike could they begin to get some traction in
the struggle for better wages and better working conditions. But it wasn’t
easy. Trying to organize a union could get you at least fired, and perhaps
killed. But over the 20th century, conditions improved. American workers could
earn a living wage sufficient to support their families, move to a decent
dwelling, even send their kids to college. And most important, they had a kind
of job security. Not anymore. Employers have grown increasingly bold about firing
workers who try to organize—a number that has increased dramatically over the
last thirty years, according to Dorothy Sue Cobble of Rutgers University. Because
if workers had union protection, a corporation like Applebee’s wouldn’t be able
to get away with paying some of its workers $4.95 an hour—the wage allowed for waiters
and others who get tips—when they were actually washing dishes and mopping
floors. Without a union, it took years, and a class action lawsuit by four
workers to finally get a ruling in their favor.
What’s
hard to understand is how workers became so powerless. Workers are, after all,
the most numerous group in any nation. They are the ones who turn the wheels of
industry, of farming, of construction. How did it happen in a government 'of the people' that a few legislators
could pass a law that eviscerates the last vestiges of people power?
This
is the story that economists Jacob Hacker and Paul Pierson tell in their 2010
book, Winner Take-All Politics: How Washington Made the Rich Richer—And Turned
its Back on the Middle Class. It is not a
pretty story. Basically, it is the story of money and how the conservatives
with money—corporations, Wall St. financiers, professionals like doctors and
lawyers—decided in the late 1960s and early 1970s that they needed to act, and
soon, to organize, organize, organize and use their power to influence the
legislative process. A key memo from Lewis Powell, then a corporate lawyer and
soon to be a Supreme Court Justice, sounded the alarm and was passed to virtually
every boardroom in the country. It urged corporations and businesses to use
their money and power to turn the legislative process in their favor and away
from unions and workers—mainly by means of intensive organizing and lobbying.
It urged the formation of foundations to provide the intellectual propaganda to
promote the glories of business and capital and “free” enterprise allegedly ‘free’
from government interference—foundations like the Heritage Foundation, the
American Enterprise Institute, and countless others.
The
corporations succeeded beyond anything they could have imagined. The surprising
part is that money began to corrupt the legislative process not with Ronald
Reagan, though it did then as well, but with the Carter Administration. In
1978, a major labor law reform bill to restore some rights of workers was a top
priority of unions, and seemed to have the votes to pass Congress. But a delaying
effort by Republicans and southern Democrats stalled the bill in the Senate by
means of a filibuster. The bill faltered, and then failed. The message was
clear to all: business now had the upper hand in Washington. With Ronald Reagan’s
success in firing Air Traffic Controllers when they tried to strike, thus
breaking their union, the power shift was almost complete. Violations of the
National Labor Relations Act rose; strikes plummeted; more and more factories
moved to the non-union states of the South. The results have been catastrophic
for average American workers and a bonanza for upper management. In 1965, average
CEO pay was about 24 times the pay of an average worker. By 2007, it was 300
times the pay of an average worker, at about $12 million per year. Nor is this just
the result of a global trend, for American CEO’s earn more than twice the
average for other rich nations. And when you get to the real mandarins, the
hedge fund managers, the rise has been obscene: as Hacker and Pierson point out,
in 2002 a hedge fund manager had to earn $30 million a year to be one of the
top twenty-five managers; by 2007, a hedge manager had to make $360 million/year
to make that level, and the top three managers were each earning $3 billion per
year!
Now
the myth has always been: well, this is what can happen in a free-market
economy. Brilliant entrepreneurs can drive the economy to ever new heights, and
the government has little or nothing to do with it. Hacker and Pierson say this
is nonsense. They say it very plainly: “The winner-take-all economy was made,
in substantial part, in Washington (i.e. by government).” How? In three simple ways. By the way
government treats unions; by the way it regulates executive pay; and by its
policing (or non-policing) of financial markets. What Hacker and Pierson do is
to lay out, chapter and verse, how this is done. Sometimes it is done with the
passage of specific legislation, such as the passage of the Commodity Futures
Modernization Act of 2000. This bill, cleverly inserted into a budget bill,
essentially prohibited any regulation of derivatives trading. And it was the
pet legislative project of Senator Phil Gramm, the Republican chair of the
Senate Banking Committee (who made his wife, Wendy, the head of the new Commodity
Futures Trading Commission). This was the bill that allowed the wild derivatives
trading that essentially brought down the economy in 2008. By that time, of
course, Gramm and his wife had left the government (she to become a board
member of Enron, with salary and stock income of around $1.8 million), he to
the board of UBS (the Swiss-based global financial giant), which needed a
massive bailout when the financial sector nearly crashed in 2008.
That’s
right. There is always a payoff to those in government who do the bidding of the
corporate giants. This is mainly done through PACs, or political action
committees. The growth of corporate PACs compared to labor PACs is instructive:
in 1976, there were 224 labor PACs, while in 1986, there were 261. Modest
growth. Corporate PACs, though, exploded: in 1976 there were 922; by 1986,
there were 2,182, outspending labor by two or three to one. This of course had
its effects, and not just in reducing the power of labor unions. It also had
positive effects for the top earners. First, when Jimmy Carter tried to reform
the tax code by instituting more progressive taxes—especially a hike in the
capital gains tax—he was met with a major offensive from business interests: they
had their bought-off reps insert an amendment that not only did not raise capital gains taxes, but cut the
capital gains tax rate in half. And Carter’s
own Democratic Congress passed it, reducing the rate from 48% to 28%. Reagan
followed with his so-called Economic Recovery and Tax Act of 1981, which
reduced capital gains once again, cut the highest tax rate from 70% to 50%, and
substantially reduced the estate tax (benefiting mainly the wealthy). As Hacker
and Pierson summarize it, “Both parties were now locked in a struggle to show
who could shower more benefits on those at the top.”
As to the 2001 tax cuts now at issue in the struggle between President Obama and the
Repugs, “more than a third went to the richest 1% of Americans—a staggering
$38,500 per household per year when all took effect” (the Repugs cleverly
delayed the full effects of this tax cut to the wealthy: they gave an average $600
rebate to middle income earners right away, but delayed the full benefit for their
upper income cronies—7% of benefits the first year, but 51% ten years later!)
And as everyone knows, people like Mitt Romney and Lloyd Blankfein now pay only
15% on their capital gains.
Again,
the key to all this has been the greater organizational money and power of the
corporate and financial barons, and the reduction in organizational power on
the progressive side, mainly with the demise of unions—the only organizations
that used to be able to curb corporate power. Now it becomes clear why
corporate-funded organizations like ALEC and all the PACs supported by the Koch
Brothers and their cronies always try to initiate legislation in state houses
to limit or outlaw unions—as in Michigan, Wisconsin, and so on. With unions marginalized,
there is no power in the nation that can compete with corporate money and
organization. The middle and poorer classes simply have no organization. And
when they do manage to get something going—as with the Occupy movement of last
year—they are viciously attacked both externally, by police, and internally (by
agents provocateurs urging mindless violence).
The
key here, as always, is understanding. The corporations and financiers know
what’s at stake, they know they’re at war, and they take appropriate, deadly action.
What
about you?
Lawrence DiStasi
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